When we need financing for any type of project, we can access the online loans offered by the different entities and private lenders. Resorting to this economic resource is very useful if we have to cover some expense for which we do not have enough money and there are several options at our disposal. Before hiring any type of credit that exists in the market, we must know how they work and under what regulatory frameworks they are. If we know the law, it is easier than we do not suffer any type of incidence or malpractice on the part of the entity. Therefore, we are going to break down the main regulations that we need to keep in mind.
The first law to contract credits online
Online monthly installment loans for people with bad credit are a very convenient financing option, since requesting them does not require a lot of time. The offer is increasingly broad and is offered by different financial credit institutions, by private lenders and now also by the new digital banking. If we want to carry out a project and we need capital, we can use the online credits that we will see below and that are governed by the Consumer Credit Law :
|Cetelem Personal Loan||€ 50,000||From 6.95% TIN (7.18% APR)||From 3 months to 8 years||Apply for|
|Cofidis Project Credit||€ 15,000||From 4.95% TIN (5.06% APR)||From 12 months to 6 years||Apply for|
These online loans, as is the case with personal loans of other amounts, are regulated by the Consumer Credit Contracts Act of 2011. This regulation was updated in that year with the aim of deepening in terms of consumer safety against fraudulent practices. Thanks to this law, the entity has to deliver a document that shows, among other things, the loan costs well explained, the cost of early repayment and our right of withdrawal. To make it clearer, let’s see in detail these concepts:
- The cost of the online loan is indicated with both the TIN and the APR. The annual equivalent rate includes the cost of interest and also of commissions. However, it would not include the price of the insurance (if it has one) or notary expenses, something more common in bank loans.
- Early amortization is a right of the client but may have a cost that is regulated by this law. In online loans or loans of any kind that have a duration of less than one year, they can charge us up to 0.5% of the outstanding capital. In those that extend beyond the year, they will apply 1%.
- The right of withdrawal is based on the fact that we can cancel the loan within 14 calendar days of the effective date of the contract. In this case, we would only have to return the borrowed money without paying interest.
These are the main points that we must know if we are going to finance a project with the online loans and that appear on the European Standardized Information Card (INE) from which the entity will deliver us.
The Usury Law applied to Internet loans
Another regulation is also known as the Law of Azcárate and was drafted in 1908. This regulation establishes its concept on the legality of the credits in terms of indicating a limit of what would be understood as abusive costs. The problem is that online loans did not exist at that time, so it is possible that it is a bit obsolete, as it does not contemplate new financial methods within the credit sector. Its application in practice is certainly to the interpretation of the judge in question.
Insurance mediation law – What happens with the insurance companies impose?
Finally, if we are going to resort to Internet loans offered by banks or any other type of lender, they may try to sell us an insurance that they sell. However, the Private Insurance and Reinsurance Mediation Act establishes that the bank can not force us to contract its own insurance. The problem here is that the entity can condition us to hire it in exchange for improvements in online credit conditions, usually, it is a reduction in the rate.